Philips versus Matsushita: A New Century, a New Round
This analysis is based on two corporations, N.V. Philips (Netherlands) and Matsushita Electric (Japan). The two companies both have experienced big changes and have different strategies and organizational capabilities now. With their distinctive operations and management, they got success and continued to compete with each other and occupied the leader position in global markets nowadays. The analysis discusses how they get success, what make them be successful, the changes they experienced, the impact of these changes and the reasons why changes are so hard for them. SWOT analysis is used to analyze Philips’ distinctive competences and incompetence. The excellent international management is the key point of Philips’s success. Several factors are considered to state Matsushita success, like divisional structure as the most significant one, innovative operation localization and Matsushita’s special business philosophy. Also recommendations are given to these two companies when they both similarly face strategic challenges. Among the recommendations, there are several perspectives: rebuilding the brands and investing in research and innovation for both companies; improving regulations and monitoring for Philips; balancing its centralization and making it work in local mechanism for Matsushita.
In this case, the author introduced Philips and Matsushita’s background, organizational development, reorganization, changes and challenges. Philips was founded by Gerard Philips in 1892; it developed a traditional of caring for works from this time. Philips only made light-bulbs firstly and begun to broaden its products lines in 1918. It developed the NOs, the NOs had important positions among the management levels and also they had special attractiveness. From late 1960s, Philips’s seven chairmen experimented with reorganizing the company to deal with its growing problems, until 1990s, it seemed to be not effective.
Matsushita was founded by Konosuke Matsushita in 1918. It had its special spirit and culture. KM made a 250 years corporate plan in Matsushita 14th anniversary. Due to the economy decrease after wars, the company eventually focused on export markets. In 1933, Matsushita became the first Japanese company to adopt the division structure, giving each division clearly defined profit responsibility for its product. Through the export of brand products, Matsushita struggled to push internationalize and matured its international operation management by different leaders policies and strategies.
The war made Philips transfer into national organizations successfully. However, the creation of the Common Market in Europe, disability to bring products to market, poor financial performance and global competitiveness forced Philips reorganization. In my opinion, there were three main problems to deal with in three aspects: organization structure, corporation culture, and product line. The organization structure of Philips was matrix organization, especially geographic/product matrix, which has made the relationship between leaders and subordinates complicated. All subordinates have to report the working process to two more leaders; this relationship would cause sequels such as abuse of power, news miscommunication, and unclear responsibility. In 1970s, the CEO Van Riemsdijk reported the disadvantaged of matrix organization in the organization committee. In order to rebalance the managerial relationships between PDs and NOs, he decreased the number of products marked, closed the least efficient local plants and built International Production Centers for concentrating production. However, to change this organization was not easy and the struggles continued.
Reducing the product line and decreasing inefficient production was another problem to deal with. CEO Wisse Dekker closed 200 plants...